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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: geode00 who wrote (52605)	3/26/2009 8:09:44 AM
From: stockman_scott	Respond to of 149317

Roubini Says Stocks Will Drop as Banks Go ‘Belly Up’ By Michael Patterson and Simon Kennedy March 26 (Bloomberg) -- U.S. stocks will fall and the government will nationalize more banks as the economy contracts through the end of 2009, said Nouriel Roubini, the New York University professor who predicted last year’s economic crisis. “The stock market is a bit ahead of the real macroeconomic and financial news,” Roubini, a professor at NYU’s Stern School of Business and the chairman of consulting firm Roubini Global Economics, said in an interview with Bloomberg Television in London today. “We’ll have some major banks going belly up that will need to be taken over.” The global equity rebound in March that sent the Standard & Poor’s 500 Index to its best monthly advance in 17 years is a “bear-market rally” and U.S. Treasury yields will “remain relatively low” as investors flock to the safest assets, Roubini said. Treasury Secretary Timothy Geithner’s new plan to remove toxic debt from financial companies won’t be enough for insolvent banks, he said. Roubini’s outlook contrasts with predictions this week from Templeton Asset Management Ltd.’s Mark Mobius and Traxis Partners LLC’s Barton Biggs, who said that equities are poised to rally as government efforts to revive the economy and banking system begin to work. Investors are “way too optimistic” about the prospects for a recovery in the economy and earnings, Roubini said. The S&P 500 surged 7.1 percent on March 23 after Geithner unveiled a plan to finance as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds. The government is conducting stress tests of banks to determine how much more capital each will need. Stress Tests Roubini said the stress tests will reveal that some banks need to be taken over and have their good and bad assets separated before being sold to the private sector. He estimates loan and securities losses in the U.S. will reach $3.6 trillion. Critics of Geithner’s plan including Nobel laureate Paul Krugman, a professor at Princeton University, say the government should take over banks loaded with devalued assets, remove their top management, and dispose of the toxic securities. Sweden adopted the temporary nationalization approach in the 1990s. “Some banks are going to have to be nationalized,” said Roubini. “It’s going to be bumpy ahead of us.” Geithner and Federal Reserve Chairman Ben S. Bernanke this week called for new powers to take over and wind down failing financial companies. They said the U.S. also needs stronger regulation to constrain the risks taken by firms that could endanger the financial system. ‘Deflationary Forces’ With “deflationary forces” lingering for as long as three years, Roubini said U.S. government bond yields will remain low and American house prices will fall as much as 20 percent in the next 18 months. While the dollar will initially benefit as investors seek a safe haven in the U.S., the currency will ultimately drop as the country’s trade deficit shrinks, he said. Mobius, who helps oversee about $20 billion of emerging- market assets as executive chairman at San Mateo, California- based Templeton, said March 23 the next “bull-market” rally has begun. Biggs, the former chief global strategist for Morgan Stanley who now runs New York-based hedge fund Traxis Partners, predicted the same day the S&P 500 may jump between 30 percent and 50 percent. The benchmark index for U.S. equities has surged 11 percent in March, poised for its biggest monthly gain since 1991. The MSCI Emerging Markets Index of equities in 23 developing nations is headed for the steepest monthly advance on record after rising 20 percent in March. To contact the reporters on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Simon Kennedy in Paris at skennedy4@bloomberg.net. Last Updated: March 26, 2009 06:41 EDT

To: geode00 who wrote (52605)	3/27/2009 4:30:17 PM
From: stockman_scott	1 Recommendation Respond to of 149317

Alaska Stock Loss Grows to $1.5 Billion as Palin Seeks Oil Cash By Michael B. Marois March 26 (Bloomberg) -- Alaska’s losses from a stock bet last year widened by 38 percent to $1.5 billion in January and February, a state official said. Jerry Burnett, a deputy commissioner in the state’s Department of Revenue, provided the updated figure to Bloomberg News after Alaska disclosed in January that it had lost $1.1 billion as of Dec. 31 on a $4.1 billion investment made by a fund used to finance budget deficits when the price of its oil falls. The money came from a windfall Alaska enjoyed as crude tax and royalty revenue soared along with oil costs. Five months after the April investment, credit markets froze and the Standard & Poor’s 500 Index was embarking on a 49 percent one- year plunge, though stocks have risen 19 percent in March. Now, with oil down 63 percent from its July 11 high, Governor Sarah Palin faces a record $1.3 billion deficit in next year’s budget and has proposed tapping that rainy day fund for the first time in five years. Lawmakers are considering a rival proposal to trim spending in fiscal 2010 and use money from the fund for education programs in 2011 instead. Alaska has the second-largest U.S. crude reserves after Texas and gets more than 80 percent of its operating budget from oil production taxes and royalties. The tumbling fortunes of its stock and top revenue source coincides with plans to sell $165 million of transportation bonds next month, its first general obligation issue since 2003. Even with $6.6 billion remaining in the rainy day fund, credit analysts give Alaska less-than-top ratings because so much of its money comes from oil. ‘Should be AAA’ “If you looked only at the money the state has in the bank, you might think that its ratings should be AAA,” said Ted Hampton, an analyst with New York-based Moody’s Investors Service Inc. in New York. “We have long viewed its extreme reliance on a single revenue source as a material credit weakness.” Moody’s and Fitch give Alaska’s general obligation bonds their third-highest ranks, Aa2 and AA, respectively. Standard & Poor’s rates them AA+, its second-highest mark. Seven states have top ratings from all three: Delaware, Georgia, Maryland, Missouri, North Carolina, Utah and Virginia. Palin administration officials said they turned to stocks so the state wouldn’t be so dependent on oil, which fell to a six-year low of $32.40 a barrel on Dec. 19 before rebounding to $54.34 in trading on the New York Mercantile Exchange as of yesterday. ‘Prudent Investment’ “A prudent investment strategy diversifies risk and incorporates an expectation of when funds will need to be tapped,” said Patrick Galvin, Alaska Department of Revenue commissioner. “The state has done that.” Palin, Republican Senator John McCain’s running mate in last year’s presidential campaign, proposed a slimmed down version of her fiscal 2010 budget in February, cutting $445.5 million from the $4.9 billion plan she offered in December. The cuts came from eliminating some new programs, including one to study renewable energy and another to promote the film industry, and reducing funding for health care and other services. The drop in oil prices “will require reductions in the budget and access to reserves to keep Alaskans employed and the economy moving,” Palin said when she released the new budget and proposed spending $1.3 billion from the rainy day fund. Her budget, including withdrawals from the fund, is subject to legislative approval. Palin declined to comment for this article. Past Withdrawals The state withdrew $498 million from the fund in 2003, when oil output dropped to 1988 levels, a total of $45.7 million in 2004-05 and nothing in 2006-08. Alaska has two major pots of money used to share oil wealth with its 700,000 residents. The Alaska Permanent Fund was created in 1976, as the Trans Alaska pipeline neared completion. It was established to accumulate oil tax and royalty money for when the state runs out of crude and to give residents annual dividends. The payouts ranged from $331 a person in 1984 to $3,269.00 in 2008, including an extra $1,200 to offset increased gasoline costs. The second fund, the Constitutional Budget Reserve, was created in 1990, as Alaska’s rainy day fund. Initially funded with settlements from tax and royalty disputes with oil companies, the reserve is used to plug budget holes in years when oil prices drop and is supposed to be replenished in surplus years. With oil racing toward its $147.27-a-barrel record, state officials predicted Alaska would have more than it needed to pay its bills in the fiscal year ended June 30, 2008, and decided to put $6 billion into the rainy day fund. Two Investment Pools The money went into the reserve fund’s two investment pools. In July, $1.9 billion was deposited into a pool for low- risk bonds and U.S. Treasuries. That one earned 5.67 percent in calendar year 2008 and totaled $3.2 billion as of Feb. 28. The other pool, known as the sub-account, is for riskier stock market bets, and that’s where lawmakers gave the Department of Revenue permission to put $4.1 billion of the surplus. The money was deposited there in April, increasing the sub-account’s balance almost 10-fold to $4.6 billion, from $546 million. Between May 1 and Feb. 28, the value of the sub-account declined by $1.5 billion, or 32 percent, reducing the size of the entire rainy day fund to $6.4 billion, from $7.8 billion, said Burnett, the Department of Revenue official. “Nobody told us the market was going to crash,” Burnett said. Investment Mix As the end of February, 44 percent of the sub-account was invested in the Russell 3000 Index of the largest U.S. companies; 19 percent was in the Morgan Stanley Capital International Europe, Australasia and Far East Index, which has more than 1,000 stocks; and 37 percent was in fixed-income securities. Both stock indexes have recovered some of their losses since Feb. 28. The Russell 3000 declined to a 52 week low of 384.38 on March 6, from a 12-month high of 836.41 last May 19. It closed at 482.03 yesterday, up 13.7 percent this month. The MSCI EAFA has fallen 43.9 percent in the past 12 months; it’s up 10.7 percent in March. State officials said Palin wasn’t to blame for the soured investment. “No governor exercises daily oversight of our investment funds,” Galvin said. “They hire skilled and competent people to do that task. Governor Palin established the standard that we will act prudently in our management of the people’s money, and she holds the members of her administration to that standard.” Alaska Permanent Fund The Alaska Permanent Fund, which isn’t as important to credit rating companies because officials cannot tap it for the state’s operating budget or debt repayments, declined 26 percent to $28.4 billion as of March 25 from a record $38.4 billion in June, according to the fund’s Web site. More than half of the Permanent Fund is invested in U.S. and foreign stocks. Its U.S. stock portfolio lost 41.2 percent since June, while its non-U.S. stock investments fell 49.6 percent, according to the site. The rest of the fund is invested in bonds, real estate and cash equivalents. To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net Last Updated: March 27, 2009 00:01 EDT

To: geode00 who wrote (52605)	3/29/2009 5:56:25 AM
From: stockman_scott	Respond to of 149317

Mother Nature’s Dow _______________________________________________________________ By THOMAS L. FRIEDMAN Op-Ed Columnist The New York Times March 29, 2009 While I’m convinced that our current financial crisis is the product of both The Market and Mother Nature hitting the wall at once — telling us we need to grow in more sustainable ways — some might ask this: We know when the market hits a wall. It shows up in red numbers on the Dow. But Mother Nature doesn’t have a Dow. What makes you think she’s hitting a wall, too? And even if she is: Who cares? When my 401(k) is collapsing, it’s hard to worry about my sea level rising. It’s true, Mother Nature doesn’t tell us with one simple number how she’s feeling. But if you follow climate science, what has been striking is how insistently some of the world’s best scientists have been warning — in just the past few months — that climate change is happening faster and will bring bigger changes quicker than we anticipated just a few years ago. Indeed, if Mother Nature had a Dow, you could say that it, too, has been breaking into new (scientific) lows. Consider just two recent articles: The Washington Post reported on Feb. 1, that “the pace of global warming is likely to be much faster than recent predictions, because industrial greenhouse gas emissions have increased more quickly than expected and higher temperatures are triggering self-reinforcing feedback mechanisms in global ecosystems, scientists said. ‘We are basically looking now at a future climate that’s beyond anything we’ve considered seriously in climate model simulations,’ Christopher Field, director of the Carnegie Institution’s Department of Global Ecology at Stanford University, said.” The physicist and climate expert Joe Romm recently noted on his blog, climateprogress.org, that in January, M.I.T.’s Joint Program on the Science and Policy of Global Change quietly updated its Integrated Global System Model that tracks and predicts climate change from 1861 to 2100. Its revised projection indicates that if we stick with business as usual, in terms of carbon-dioxide emissions, average surface temperatures on Earth by 2100 will hit levels far beyond anything humans have ever experienced. “In our more recent global model simulations,” explained M.I.T., “the ocean heat-uptake is slower than previously estimated, the ocean uptake of carbon is weaker, feedbacks from the land system as temperature rises are stronger, cumulative emissions of greenhouse gases over the century are higher, and offsetting cooling from aerosol emissions is lower. Not one of these effects is very strong on its own, and even adding each separately together would not fully explain the higher temperatures. [But,] rather than interacting additively, these different effects appear to interact multiplicatively, with feedbacks among the contributing factors, leading to the surprisingly large increase in the chance of much higher temperatures.” What to do? It would be nice to say, “Hey, Mother Nature, we’re having a credit crisis, could you take a couple years off?” But as the environmental consultant Rob Watson likes to say, “Mother Nature is just chemistry, biology and physics,” and she is going to do whatever they dictate. You can’t sweet talk Mother Nature or the market. You have to change the economics to affect the Dow and the chemistry, biology and physics to affect Mother Nature. That’s why we need a climate bailout along with our economic bailout. Hal Harvey is the C.E.O. of a new $1 billion foundation, ClimateWorks, set up to accelerate the policy changes that can avoid climate catastrophe by taking climate policies from where they are working the best to the places where they are needed the most. “There are five policies that can help us win the energy-climate battle, and each has been proven somewhere,” Harvey explained. First, building codes: California’s energy-efficient building and appliance codes now save Californians $6 billion per year,” he said. Second, better vehicle fuel-efficiency standards: “The European Union’s fuel-efficiency fleet average for new cars now stands at 41 miles per gallon, and is rising steadily,” he added. Third, we need a national renewable portfolio standard, mandating that power utilities produce 15 or 20 percent of their energy from renewables by 2020. Right now, only about half our states have these. “Whenever utilities are required to purchase electricity from renewable sources,” said Harvey, “clean energy booms.” (See Germany’s solar business or Texas’s wind power.) The fourth is decoupling — the program begun in California that turns the utility business on its head. Under decoupling, power utilities make money by helping homeowners save energy rather than by encouraging them to consume it. “Finally,” said Harvey, “we need a price on carbon.” Polluting the atmosphere can’t be free. These are the pillars of a climate bailout. Yes, some have upfront costs. But all of them would pay long-term dividends, because they would foster massive U.S. innovation in new clean technologies that would stimulate the real Dow and much lower emissions that would stimulate the Climate Dow. -Frank Rich is off today. Copyright 2009 The New York Times Company